What Really Turned My Trading Around

*cleanup*

wow the thread was moved fast to trading journals....just was reading it in the trading systems thread and now moved here....?!

well anyways what i see on ur chart are:
-supply and demand areas
-some sort of zigzag
-trendlines

am i close yet?

keep up the good work and nice to hear how u suceeded after blowing a few accounts..(i am on my 3rd account now lol)

Hi hollandpippin,

Yes you are right :
-Supply and Demand areas
-Some sort of ZigZag
-Trendlines

But you see, I am sure all of us ask the same honest questions about these, but seems that they also pretty much go unanswered!
-How do we define SD areas? There are too many ways, many are pretty subjective. Extreme of prices? Opens? Closes? Wicks of candles? Volume? Inside bars? Which timeframe to look at?
-ZigZags? Which ZZ do we use? There are too many, many are pretty subjective. I don't know what kind of formula do these ZZs use.
-Trendlines? How do we place them 'correctly'? 2 bounces? 3 bounces? Under which timeframe? How do we define bounce? How do we define breaks? How do we define false breaks(!)?

Yet, there are traders who say, these 3 tools, ermm, work!

Why? Really? What do you think?

I'm sure they do work for some people, but all 3 are far too subjective for my liking

I much prefer a more mechanical approach, ideally a completely mechanical approach which allows me to take my emotion out of trading completely

Andy

You are right, they are too subjective for my liking as well. But heres an interesting take : its also possible to make a subjective approach become objective, so long one is able to find out the 'core' of the method.

This is why indicators are created.

That, in turn, makes the approach mechanical. Indicators do help.

The unfortunate part is that too many indicators are created and 'too creatively' to the point its hard for beginners to learn how to understand the real market.

http://i44.tinypic.com/2hdof2c.png
http://i39.tinypic.com/w2osck.png

Here's a EURJPY Long trade that I just took. The entry survived for 7 hours! Its a pretty tight SL worth 20 pips (including spread of 4 pips). I don't know if its going to survive, but what I did is to open 3 lots. Then used 1 of the 3 lots to BE the overall position. Now I am free to let it run.

O BTW, this is also EURJPY near its decade low. What a nice place to long it.

Coming back in 8 hours. See ya later.

The position survived! Now while waiting, let me explain why I took this trade.

http://i39.tinypic.com/wv7e5x.png
http://i44.tinypic.com/260946w.png
http://i43.tinypic.com/sz8v8z.png
http://i39.tinypic.com/10p0y9u.jpg

Update : 1 of the lots got its SL nicked. Its ok => We still have the other one surviving. Lets see.

Position is still alive. Pretty fun =>
http://i40.tinypic.com/2me0pd.png

The initial position is still alive. I've added another lot to this 'winner'. Gonna lose nothing again since using profit from a quick scalp as a pin cushion/buffer. See you next week!
http://oi43.tinypic.com/28b5i5i.jpg

Every time I see a thread like this It always drives me back to the old "tried and true." And it's a man... He is a Man of great understanding. A Trading Master.

He is a man that has a journal here and posts when he sees fit. He is a scholar and a teacher. His trading is 95% accurate and he is poised. He is a no nonsense trader. His technical analysis is beyond reproach. He has prodigious insight into the markets.


Thank you Rumpelstiltskin for this journal. It reminded me once again to trust the good ole

Tried
               and
                True

Cool. Where's his journal? I would love to see it too.

Not bad. The position survived over the weekend and even earned abit of Carry Trade interest. Lets see what happens. Its been 4 days and counting (including weekend).

http://i43.tinypic.com/2edbm1y.png

I came home with a surprise. Should I take profit? HMMMM!

http://i44.tinypic.com/5fqexk.png

Nah. I have time to sit.

http://i44.tinypic.com/29f6yae.png

All right. Enough play. Taking the profit =>

http://i44.tinypic.com/3020x11.png

Trying to short gold live now. Gold is :
+ at the daily high
+ retraced a certain amount
+ trying to bounce off a line in the sand my indicator drew automatically
+ try to return from an oversold position to the quarterly trend channel my indicator drew automatically (again)

Pretty fun. Sometimes I wonder if I should release this indicator and everyone will be starting to rob the banks? Or it is just me, the trader that is making the difference? Or both? Is it luck? I don't know sometimes. Really.

http://i41.tinypic.com/1072cyw.png

http://i40.tinypic.com/15d27a0.png

http://i39.tinypic.com/dyohzn.png

So I decided to take profit off shorting gold. I also had a short AUDUSD running. The profit from gold will act as a stop loss buffer so that my capital loses nothing. Lets see.

http://i41.tinypic.com/izwysz.png

http://i39.tinypic.com/2laep90.png

http://i41.tinypic.com/120pmc1.png

Not feeling well today. And the year is ending soon. Decided to close the position. In profit anyway.

http://i39.tinypic.com/jv6asp.png

http://i43.tinypic.com/i2lmvp.png

Just some doing some self reflection on a quiet friday night.

I am going to talk about a very contraversial and difficult topic. Regarding indicators. A lot of the thoughts here are both my reflections + research + experience creating indicators.

There are 2 types of indicators :
Measuring / Direct Indicators
Derivative / Indirect Indicators

Most indicators will work using these 4 types of data :
Price - height
Time - width
Speed - slant
Volume - depth

Although one might see some kind of physics here, its not. It looks like it, but we have to remind ourselves that the market is just a reflection what other people are thinking.

Speed / slant may look like a indirect measure. Its not. Think about a tick data chart. What you see immediately? Price moves up and down all the time, but always in a certain slanted angle.

Also I am assuming its hard to get good volume data, since good volume data requires good tick data, so thats leave the topic of volume out for now.

So we all know most of us can't get good quality tick data. So our next best is candlestick charts.



Frankly, candlesticks itself are indicators already, since they compress price into certain sets of time. This alone actually makes it a derivative. But its not that bad actually. M1/M5/M15/M30/H1 are still quite ok. We can still treat these timeframes like ticks. Just compressed ticks (LOL). An hour is an hour. Can't argue with that. The problem starts from H2 onwards. Timezones make a hell of a mess of everything. You won't know if the data real enough or not, since we want to have a good measure of what the entire world is thinking. The chart has to reflect it as much as possible.

But alas, even though we have all the H1 candle data we need, we still need someway to string them up together. Candlestick reading is a good attempt, but frankly, its not perfect enough. In fact, if you study the art of candlestick reading and its origins (read Felipe Tudela's book), you will find that the key to candlesticks has nothing to do with the candlestick itself, but understanding how price moves in waves 1st! This reminds us of the perfect tick chart.

So knowing how price moves in waves (at least on the technical side... we have not gone into psychology yet) is considered fundamental.

High and Low. Nothing else. Ignore the open or close for now. If you want to trade, buy low and sell high, right? Right. So what happened? Is trading really that hard that we must confuse ourselves?

Therefore indicators IMO, should do the following :
1- Correct technical charting problems; all the complaints I had stated above
2- Magnify important price movement ; how high and how low and how fast
3- Gather statistics based of time and price
4- Help the trader observe and find edges that concide with market reality faster and better

So all Measuring / Direct Indicators should qualify on these 4 terms, no more, no less.

After we 'correct' these issues and put them aside, the rest is really all in your head psychology. So many traders just cannot get past this. Thats why I said MT4 or most major charting software are created with the broker in mind, not the trader. If it is created for the trader in mind, there will be no business. Think about it!

I hate this personally, as it is a way to create losers in the markets. Most markets are zero sum. So if you can 'popularize' some kind of indicator, you will know there weaknesses immediately. This is why I don't use those common MAs and MACD and stuff. Not even pivot points.

These are Derivative / Indirect Indicators. These indicators distort reality and serve to distract the uninformed trader. False and incorrect information, in any war, creates weaknesses. In the trading war game, in order to win, you look for weaknesses. And press ahead for the win. Or better, create the weaknesses and expliot them and see them drop like flies.

Now, we can argue all day about successful traders using certain indicators like MA and earning a ton of money. My counter arguement would always be : what if the market changes? The most common type of change, at least technically speaking, would be changes in voliatlity. Would the indicator reflect and warn the trader of the change?

FYI if we talk about changes in voliatlity on the psychological side, it would mean stuff like bank interventions, market makers pushing price in certain directions deliberately, fear raising in public sentiment... etc

However, there are certain Derivative / Indirect Indicators that are considered acceptable. These Derivative / Indirect Indicators look for inhernited weaknesses of the market due to its nature and structure. Thats another topic altogether.